The economic impact of coronavirus will be felt around world. Photo / Getty Images
The economic impact of coronavirus will be felt around world. Photo / Getty Images
More than 90 per cent of the world's economies have been plunged into recession as the coronavirus pandemic inflicts carnage on a greater scale than anything suffered even in the Great Depression.
Economic destruction will be more widespread this year than any on record, according to the World Bank, which studied recessions dating back 150 years.
It expects global GDP to fall by 5.2pc this year - the biggest drop since the Second World War and a collapse almost three times as steep as that suffered in the financial crisis.
The plunge will be led by a crunch of 9.1pc in the eurozone, and 6.1pc in the US and in Japan after lockdowns shut businesses around the world and brought trade to a crashing halt. No UK forecast was included.
Emerging markets will suffer a 2.5pc fall in GDP, their first drop for 60 years, tipping millions into extreme poverty.
The main exception is China which is likely to eke out growth of 1pc this year, despite being the first to suffer from the coronavirus.
Even with a strong rebound next year the world economy will not recover its pre-pandemic level in 2021 and will be left with a long-lasting toxic legacy of low investment, lost education and underwhelming growth, the economists warned.
The World Bank said: "The pandemic is likely to exert lasting damage to fundamental determinants of long-term growth prospects, further eroding living standards for years to come.
"Deep recessions triggered by the pandemic are likely to leave lasting scars through multiple channels, including lower investment; erosion of the human capital of the unemployed; and a retreat from global trade and supply linkages. These effects may well lower potential growth and labor productivity in the longer term."
A longer outbreak with prolonged restrictions on the economy could force global GDP down by as much as 8pc this year, recovering to grow by just over 1pc next year.
By contrast if the pandemic fades more quickly and economies reopen faster than expected, limiting the contraction to around 3pc this year - though that is still bigger than the financial crisis - with a sharp rebound of 5pc next year.
Some industries will be affected for a long time regardless of the overall recovery.
Trade has fallen more abruptly than in the financial crisis, with travel disrupted and supply chains strained. As a result the World Bank predicts a crash of more than 13pc this year in global trade volumes.
The bank added: "[Trade's] recovery is expected to be historically feeble, however, reflecting the exceptional character of the present crisis, as well as the length of time that it will take to restore confidence, to replace bankrupted firms, and to establish virus-safe working and entertainment environments."
In addition, companies may seek to buy more local goods instead of relying on long global supply chains that have proved easy to disrupt.
Similarly, the bank said: "International air travel may take a very long time to re-attain the levels of recent years, as businesses and tourists make fundamental reassessments of the trade-off between foreign trips and infection risks, airlines reduce passenger loads to increase spacing, and governments maintain tighter border controls."
Consumer industries could have a weak recovery too as some households take on debt or burn through savings to cope with unemployment, potentially leaving them in a weaker financial position and encouraging more precautionary saving, instead of spending, after the crisis is over.
